Torchlight II is a massive game. It's packed full of content. You can spend many, many hours hacking away at monsters, questing with your friends, and making mods in this new action-RPG (out today for PC).

Yet it'll only cost you $20, a third the cost of most video games today. That's a steal. So out of curiosity and befuddlement, I hopped on the phone today with Max Schaefer, CEO of Torchlight developer Runic Studios, to ask him how they can afford to maintain a 30-person studio while selling their game at such a ridiculous price.

Here's what he said:

Well, we're a small kind of independent company so we can just kind of decide what we're doing with a whole lot of external [influence]. So it's in our authority to do so.

Is it a good idea? I don't know. It feels right to us; it felt right for Torchlight 1 and then, it just felt like, you know we can make a really good argument if we do this again at twenty bucks for Torchlight II because it's just bigger and better in every way.

And yeah, we kind of— in the long run we want to be known as the people who have the best value in gaming. And we want to build a long-term community. We want to have people that buy our games and stuff for a long long long long time. So it's sort of an investment in the future.

But it's also possible because we no longer sell PC games in boxes. There's no way that, if we were a box-based game, that we could charge [$20]. It's really the advent of the digital distributors like Steam and stuff that make this possible, just because so much— when we sell a $20 box at WalMart we get like $3.50 back, whereas we get like $14 back for a digital sale.

That's kind of the industry standard for digital is like a 70-30 split. And we get more than that for a sale on our site because we're not going through anybody. But in any case the economics work better than— you know, much much better than boxes. And they're not that much different from when we used to do a $50 box through a regular box publisher that's about what would come back to the developer anyway.

It's really not— it kinda works for us is what I'm saying. We're gonna make money fine on it.

(I followed up later to ask if Diablo III had anything to do with this decision, but I haven't heard back yet.)

I've spent the weekend mainlining Runic's Torchlight II. As of this writing, my level 39…
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Schaefer didn't know off hand how many copies the team needs to sell in order to turn a profit—all he could tell me was that the total budget was under $10 million—but he did predict that Torchlight II will "clear a million very quickly." They've already sold "well over a quarter" million pre-orders for the game.

The team doesn't know what they're going to do next. But they're developing downloadable content for the game. And it'll all be free.

"Part of our thing is that it's a $20 game, and once you start muddying the waters with paid DLC then it's like, well, it wasn't really $20," he said. "We wanna just avoid that whole thing entirely. We wanna just make it better and better and better."